For experts, California carbon market extension may bring more questions than answers
While Californian lawmakers have succeeded in passing a new law to extend the state’s cap-and-trade scheme, a sense of uncertainty lingers for market observers as they await detailed rules from the Air Resources Board.
California lawmakers narrowly approve cap-and-trade extension package in show of bipartisanship
A legislative package to extend California’s landmark cap-and-trade programme was narrowly approved by the state’s Senate and Assembly with bipartisan support on Monday, securing the future of the market until at least 2030.
EU Market: EUAs hold ground around €5.50 after another well-bid auction
EU carbon prices spent much of Tuesday above €5.50 after a well-bid auction lifted EUAs, but they faded in afternoon trade on brisk selling and as coal prices continued to post new multi-year highs.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Green profits – A US index of 40 publicly-traded solar companies, wind-turbine component makers and others that benefit from reduced fossil fuel consumption is up 20% this year. That’s more than double the S&P 500’s 9.8% gain, and better than the 8.3% rise by an index of leading coal companies, showcasing how well low-carbon technologies are doing so far under a Trump Presidency that purports to favour fossil fuels. (Bloomberg)
Treasury’s new mandate – The Trump Treasury Department will use its votes on the boards of multilateral development banks, including the World Bank, to encourage fossil fuel use in developing countries, according to updates made to its website yesterday. According to Politico, while the new standards say the US will advocate for ”universal access to affordable, reliable, sustainable and clean energy,” it emphasises that the US will also help “countries access and use fossil fuels more cleanly and efficiently. An Obama-era Treasury guidance document, which laid out instructions to “build demand for no or low-carbon resources” in US development assistance plans, is no longer available on the Treasury department website. The new updates also include no mention of climate change. (Climate Nexus)
Merkel’s showing coal the door? – Chancellor Angel Merkel appears to have signalled the end of lignite in Germany, writes Sueddeutsche Zeitung. In her traditional summer interview with broadcaster ARD, Merkel stated that working with affected regions to develop alternatives for coal mining employees as the first move is part of her CDU party‘s platform and that “then the exit can be contemplated”. The move would not only win the support of the Greens but also trump the left-of-centre SPD, which still supports brown coal mining in some areas. For Merkel, the decision addresses a failure during her three terms in office to adequately deal with coal. In 2005, Germany produced 990 million tonnes of greenhouse gases. Today, the country still produces 900 million tonnes. Without a concrete plan, she is in danger of missing her own 2020 emissions target by more than 150 million tonnes. Separately, news that the state of Brandenburg follow North Rhine-Westphalia and drastically soften its climate targets also threatens the goal. According to WWF, the NRW government’s decision will result in an increase of 2.7 billion tonnes of CO2 emissions, while a similar move by Brandenburg would mean more 1 billion more. (Clean Energy Wire)
China’s blip – China’s stronger economic growth since early 2016 has been driven by a massive credit boost that has benefited construction and ailing heavy industry sectors such as steel, cement and coal. Together with an exceptionally poor year for hydropower, this has seen coal consumption and CO2 emissions rebound, writes Greenpeace’s Lauri Myllyvirta on the environmental campaigners’ EnergyDesk website. The surge in heavy industry threatens to break China’s out of its recent trend of flatlining greenhouse gas emissions but may also result in a tighter national ETS as regulators prepare allocations for the programme’s launch later this year.
Risks of the solution – The raw materials needed to build clean energy infrastructure could create environmental challenges, reports the Financial Times, covering a World Bank report. It points towards certain metals, including lithium, and rare earth elements, arguing that proper management of their extraction is required. (Carbon Brief)
More lawsuits – Three California municipalities filed lawsuits Monday against 37 of the world’s biggest fossil fuel companies, including Chevron, Exxon, and Royal Dutch Shell. The legal challenges, brought by Marin and San Mateo counties and the city of Imperial Beach, allege that the companies knew about the harm of burning fossil fuels and therefore should pay for current and future damages to the municipalities due to climate change. The suit also alleges the fossil fuel companies launched a “coordinated, multi-front effort” to discredit climate science and spread doubt. (Climate Nexus)
And finally… A Kodak moment, but not the good kind – Companies face big risks from not future-proofing their operations by implementing carbon pricing, warned Feike Sijbesma, CEO of food supplement firm Royal DSM. “I would even say to companies: If you don’t want to create your own ‘Kodak moment’ … [you should] put a price on carbon internally right now, like we do,” he told CNBC. While ‘Kodak moment’ was previously the ubiquitous US photography company’s tagline, Sijbesma was using it to refer to the company’s struggles in the 1990s and 2000s resulting from its slowness in transitioning to digital photography, which ultimately let to its bankruptcy earlier this decade. Sijbesma, co-chair of the World Bank-led Carbon Price Leadership Coalition, added that almost 1,000 companies around the world already have an internal price on carbon, with DSM setting itself a price of €50/tonne.
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